U.S. oil futures settle at two-week high on strong data

U.S. oil futures rose to the highest settlement price in two weeks on Thursday as data showed an improving U.S. labor market in the world's largest oil consumer.

The number of Americans filing for unemployment benefits dropped unexpectedly last week, data from the U.S. Labor Department showed.

"As long as we have signs that economic conditions are not going to slow, we'll see improvement," said Gene McGillian, analyst and broker with Tradition Energy in Stamford, Connecticut.

Stock market gains also helped support crude oil prices. The Dow Jones industrial average extended gains for a 10th straight day on the labor market data.

The U.S. dollar retreated from a seven-month high against a basket of currencies as some currency traders cashed in profits.

A weaker U.S. dollar helped buoy U.S. crude oil prices. Because crude is priced in U.S. dollars, when the value of the currency drops, oil generally becomes more expensive to offset the dollar's weakness.

U.S. crude oil futures settled 51 cents higher at $93.03 per barrel.

Brent crude for April settled 90 cents per barrel higher, or 0.83 percent, at $109.42 as the contract expired.

Oil slipped earlier in the session as investors focused on a subdued outlook for demand growth in the United States and China, easing supply concerns.

Two of the three most closely watched oil forecasters - the International Energy Agency and the U.S. Energy Information Administration (EIA) - lowered global oil demand growth forecasts this week. The third, OPEC, flagged downside risks to the outlook.

The EIA on Tuesday cut its 2013 world oil demand growth forecast by 40,000 barrels per day to 1.01 million bpd.

Comments by China's central bank on stabilizing inflation expectations reinforced concern it may drop its pro-growth policy before economic expansion gathers full momentum. The remarks pressured most markets in Asia.

Supply concerns have taken a back seat for now.

South Sudan said on Tuesday it would be ready to restart oil production, which was shut down for more than a year, within three weeks, and on Wednesday a U.S. government report said crude stockpiles rose last week.

OPEC production is expected to trend higher as Saudi Arabia adds to supplies in coming months. Saudi Arabia expects to raise its oil output in the second quarter, oil industry sources said last month.

Saudi cut back its output in the last two months of 2012 because of weaker Asian demand and a lower domestic need for crude in power plants, among other factors.

(Reporting by Jeanine Prezioso in New York and Manash Goswami and Ramya Venugopal in Singapore; additional reporting by Alex Lawler in London; editing by Jim Marshall and Kenneth Barry)